Debt: The First 5,000 Years – David Graeber

Eye-popping stuff here. So, and the author nails his colours to the mast fairly early on, but this is a critical look at some of the theories that underpin the current financial system, based on the notion that everyone must pay their debts as a matter of honour, except for the US, who don’t actually have any intention of paying back their public debt (also various other governments).

Graeber is an anthropologist, and fills the first half of the book with examples of how trade and debts work away from the developed world, and examples of how it worked in history and pre-history. The surprising thing, for me at least, was that “barter” as a system never really happened before money was invented (although it was used when currencies collapsed from time to time). This is counter to just about every explanation of how trade used to work (blame Adam Smith for this), and kind of broke my mind. But it makes sense. Why would you trade chairs for pigs? How could you decide what a reasonable rate of exchange would be? So you just share stuff around the community. If you’re going to see everyone you might trade with every day for your entire life, you can’t really cheat for long.

Money tends to be invented to pay soldiers, who need portable payment, and don’t necessarily spend their time in friendly society. And then you make your taxes payable in the same coin, and it becomes the default way of trading between people. When the metal dries up – sometimes melted down into religious artefacts, sometimes stored as bullion, depending on the mores in favour in that place at that time – virtual money tends to become the norm.

This process swings through cycles, with materialism and hard cash being associated with periods of violence, and virtual money tending to be less so, although virtual money periods tend to build up resentment due to debtors being exploited by creditors, to the point where violent revolution becomes almost inevitable, unless the ruling class issues a debt-cancelling jubilee.

There’s also a lot about slavery, both physical chains and whips slavery and virtual debt-peonage/wage slavery, starting as the point where value is established – a human life is the ultimate price from which everything else is derived. Apparently. I’m not sure I fully understood this. There’s also a lot about the morality of debt, and religious pronouncements on the subject of interest-bearing loans.

All of which leads to the conclusion that capitalism cannot stand, and the debts should be cancelled, and the tables reset. We’re in a relatively new period of virtual money, since Nixon cancelled the gold standard, and it’s hard to see how it will develop, but violent revolution would be a decent guess.

I couldn’t help comparing this treatment of the origin of public debt with the way it’s dealt with in Neal Stephenson’s Baroque Cycle – the celebration of the new world order of rational scientific thinking spills over into admiration for a system that allows governments to make more war – at least that’s how I remember it. I will need to read that again (any excuse). Also interesting to compare it with another far-reaching history of humanity – Why The West Rules – For Now with its energy/literacy/war-making scoring explanation for the cycles of history in China and the West -which puts a more positive spin on “progress” but also allows that we might be about to tip over into apocalyptic terror.